New energy storage, including lithium-ion batteries, molten salt batteries, hydrogen energy, and other new energy storage technologies, all show their unique abilities

The energy storage market is facing new development opportunities.

The third regulatory cycle (2023-2026) officially begins to implement the provincial power grid transmission and distribution electricity price policy, and the reform of the electricity price mechanism is further promoted. As the mechanism for allocating flexible resources in the market gradually improves, the demand space for installing "power banks" in new energy will gradually be released.

In recent years, with the increase in the proportion of new energy generation, the development of new energy storage has been rapid. As of the end of last year, the installed capacity of new energy storage in China was about 8.7 million kilowatts, with a year-on-year increase of over 110% in new installed capacity. "The number of investment and financing events in the energy storage industry in 2022 is considerable, with over 80 financing cases," said Yue Fen, Deputy Secretary General/Research Director of the Zhongguancun Energy Storage Industry Technology Alliance. For the energy storage industry, the amount of capital invested is "generous," with a total investment and financing amount of up to 10 billion RMB last year.

The new type of energy storage is known as the "power bank" in the power system, which can "charge" during low electricity consumption periods and "discharge" during high electricity consumption periods. With the continuous growth of volatile and intermittent new energy electricity, the role of "power banks" will become increasingly apparent. At the same time, the options for choosing "power banks" for new energy also need to be gradually diversified.

The diversified development of electrochemical energy storage still needs breakthroughs

"New energy storage" includes new lithium-ion batteries, flow batteries, molten salts, flywheels, compressed air, etc. At present, the management system for the national new energy storage industry has been preliminarily established, and the construction of new energy storage demonstration pilot projects is constantly accelerating. While the industry scale continues to expand, the trend of diversified development of new energy storage technologies is also gradually emerging.

However, although new energy storage is gradually entering the stage of large-scale development and diversification is also gradually emerging, currently, the field of new energy storage still presents a unique situation of electrochemical energy storage, while other new energy storage are being ignored by the market and capital. According to the 2023 China New Energy Storage Development Report, lithium-ion battery energy storage still dominates among the newly put into operation energy storage installations, accounting for approximately 94.5%.

China's new energy storage is still in its early stages of development, and there are significant differences in the maturity of the industry chain corresponding to different technological routes of new energy storage. In the view of Cui Jian, Executive Vice President of Xiamen Kehua Digital Energy Technology Co., Ltd., the new energy storage field is showing a unique situation of electrochemical energy storage. On the one hand, it is due to the rapid development of the global battery industry. In a high demand environment, the battery industry is about to enter a golden age. On the other hand, the cost of batteries has been accumulated for a long time and technological innovation has promoted the development of electrochemical energy storage.

"Electrochemical energy storage has a higher energy density and a more mature industrial chain." Cui Jian said that the reason why other new types of energy storage have been neglected by the market and capital is that compared to other new types of energy storage, electrochemical energy storage has more advantages in scenario application, technology, cost, construction cycle, conversion efficiency, and site selection requirements, with a high degree of flexibility, safety, and cost-effectiveness.

Regarding the issue of development maturity, Zhou Chengjun, the general manager of Shanghai Chint Power System Co., Ltd., also believes that in terms of supporting the electrochemical energy storage industry chain, China has basically achieved localization, and the high cost inverter and battery links have obvious advantages in the global market. With the gradual easing of raw material prices and the rapid decline in manufacturing costs, electrochemical energy storage represented by lithium batteries is expected to gradually expand its market share in the future.

From the perspective of cost competition for different types of energy storage, Yue Fen pointed out that in the past two years, the upstream material prices of lithium batteries have fluctuated sharply, with lithium carbonate material prices increasing by 12 times, causing downstream energy storage equipment prices to rise by more than 20%. This has led to a sustained increase in capital's attention to alternative technologies for materials such as sodium ion batteries, as well as long-term energy storage technologies required for power systems. Since the first half of 2023, the price of lithium carbonate has plummeted. As of mid April, the market price of lithium carbonate batteries has decreased by about 66% compared to the beginning of the year. The winning price of lithium energy storage equipment has also fallen, which will have a certain impact on the application of other energy storage technology routes.

Adapting to local conditions and scientifically configuring power banks to showcase their unique abilities

Faced with the needs of new energy development and power system transformation, diversified development of new energy storage will be an inevitable choice. The recently released Guiding Opinions on Strengthening the Stability of New Power Systems (Draft for Comments) by the National Energy Administration proposes to promote scientific allocation of various types and diversified energy storage according to local conditions, form power regulation capabilities with multiple time scales and application scenarios, improve the output and load characteristics of new energy, and support a high proportion of new energy exports.

To promote the diversified development of new energy storage, Cui Jian suggests continuously expanding the application of various forms of energy storage. Combining the resource conditions of various regions and the demand for different forms of energy, we will promote the construction of new energy storage projects such as long-term electric energy storage, hydrogen energy storage, and thermal (cold) energy storage, promote the development of various forms of energy storage, and support the construction of comprehensive smart energy systems.

In Cui Jian's view, many energy storage technology routes, such as electrochemical energy storage, molten salt heat storage, compressed air, flywheel energy storage, hydrogen energy storage, etc., can actually be divided into capacity and power types, corresponding to the needs of peak shaving and frequency modulation, respectively. Specifically:

Molten salt heat storage and compressed air:

Especially suitable for supporting long-term energy storage needs in the future, it should adapt to the high penetration rate of new energy in the new power system, and even reach daily/quarterly energy storage needs;

Flywheel energy storage:

The response rate is higher and more suitable for the needs of frequency modulation and other scenarios.

Emerging hydrogen energy:

As a chemical raw material, fuel, and energy storage form, its application scenarios are more extensive. In addition to energy storage needs, it has broader development prospects in fields such as chemical engineering and transportation.

He emphasized that due to the advantages and disadvantages of various energy storage technologies and their different usage scenarios, it is necessary to guide the market and capital to promote the diversified development of energy storage. Based on the rapid development of the above technologies, combined with regional advantages and investment returns, achieve a balanced development of economic and social benefits, in order to guide the rapid diversified development of the market.

Yue Fen believes that different energy storage technologies have different applications in the power system:

Power based energy storage technologies with fast response speed and high power density (such as electromagnetic energy storage, flywheel energy storage, and partial electrochemical energy storage): suitable for participating in short-term regulation of the system, such as providing virtual inertia, fast frequency regulation, suppressing low-frequency oscillations in the power grid, and improving short-term voltage stability;

Energy based energy storage technologies with large capacity and long discharge duration (such as pumped storage, compressed air storage, molten salt heat storage, hydrogen storage): suitable for long-term regulation in the system, such as participating in system frequency regulation, peak shaving and valley filling, system backup, etc.

"At present, new energy storage applications are mainly based on 2 hours. With the continuous increase in the penetration rate of new energy, the demand for energy storage at different time scales of 4 hours or more and 30 minutes or less will be increasing." Yue Fen suggests that social capital should be guided to accelerate the promotion of compressed air and liquid flow batteries from demonstration verification to large-scale application at a time scale of 4 hours or more. Through technological iteration and upgrading, the application demand for long-term energy storage with low cost and long lifespan should be achieved. On a time scale of less than 30 minutes, without significantly increasing costs, research and develop battery energy storage with a charging and discharging rate of 2C or above and a system cycle efficiency of 6000 or more, promote the development of flywheel and supercapacitors from technical research and project demonstration to large-scale application, and achieve the application requirements of short-term energy storage with high safety, long lifespan, and high rate.